Re: ONLINE-ADS>> Haggling Tactics

richard_at_tenagra.com
Fri, 12 Dec 1997 17:52:35 -0600 (CST)

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David Fox, KnowledgeWeb" <david_at_knowledgeweb.com> wrote:

> "A 3% overall is extremely poor for <SITE NAME>. Even if we take
>out the
>poor performing banners, your site will need to do better to go beyond the
>first test."

David,

Comparing click-through rates across sites, which is what it sounds like
this buyer is doing, is a poor way of evaluating a banner buy. The same
banner will perform differently on different sites.

More experienced media buyers evaluate a buy based on the cost to reach
your objective. Mark Grimes, president of Eyescream Interactive, was the
first person I ever heard couch it in those terms. (I think was at Web Ad
"97 last Spring, several beers into a discussion we were having.) He
describes it as Cost Per Objective (CPO). In fact, Mark laid out this
philosophy in ClickZ's debut article. See:

New Media Equals a New Yardstick for Media Buying
ClickZ
http://www.clickz.com/archives/0501977.html

Here is how I have applied Mark's wisdom to judging the value of an ad buy.
Once I've identified sites that could reach my target demographic, I take
the number of impressions I'm buying and the cost of those impressions and
then run them through these formulas:

number of impressions x 2% CTR (assume a conservative #) = number of
expected visitors

cost of the buy / number of expected visitors = Cost Per Prospect (CPP)

Example:
--------

100,000 impressions x 2% = 2,000 expected visitors

$5,000 cost of buy / 2,000 expected visitors = $2.50 CPP

Now, if my client is selling $50,000 automobiles, paying $2.5O to get a
person to look at our promotion is a good deal. If my client is selling
$1 widgets, however, it is very bad buy.

Conversely, you can use this same formula to gauge if your site traffic is
valued correctly when compared to your competitors. Some recent media
buying research that I performed yielded CPPs from $16 to 85 cents. The
ironic thing about it is that the $16 CCP is for a site with traffic that I
would consider more general. While the 85 cent CPP is for a niche site
within this industry that has a demographic much closer to my target. In
fact, the three buys I recommended all had a CPP of under $3.

It is obvious to me that someone doesn't know what their traffic is worth.

David, if I were you I would run this test on my site and see how I came
out. If the numbers look good, I would take them back to the media buyer
and explain the value he or she is getting in the above terms. It is not
your job to do anything more than deliver a specific audience at a fair
price. Smart media buyers recognize this. Unfortunately, there are not
enough of us out there yet.

richard

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